Mortgage rates have finally settled down a little from their post-election romp. We’re still seeing volatility with big changes from day-to-day, but overall, the market seems to be waiting for the next big thing.

That thing may happen tomorrow. Before the election, we fretted about the European Central Bank’s decision on whether it will begin to taper asset purchases. It promised to let us know at its Dec 8th meeting. Last week, a leaked report suggested the decision had been made – tapering would start. But, then the Italians resoundingly defeated a measure supported by the financial elite that would have given the prime minister more power to implement austerity measures. Now, the press is talking about how long Italy will remain in the EU.

If the ECB starts to taper, the decision is likely to drive up bond rates, and markets seemed to price-in that decision earlier this month. However, if the ECB postpones the decision again, we’ll probably see rates fall, maybe as much as a quarter-point. Markets this week seem to be hedging towards the latter outcome with rates improving slightly.

FHA also is raising its area loan limits in 2017, primarily affecting the 4 largest metro areas. FHA sets the limit by county and calcuates the limit based on 115% of the county’s or metro area’s median home price.

Median home prices rose in Texas last year, so loan limits rose in the Austin, Dallas/Ft. Worth, San Antonio, and Houston metro areas. Austin’s limit rose almost $30k to $361,100 for a single-family home. The DFW limit rose about the same amount to $362,250, still the highest in the state. San Antonio’s limit rose about $10k to $327,750. Houston, given its flagging market due to the oil industry downturn, rose only slightly to $331,200. Remember that these limits apply to all the metro’s counties, not just the cities themselves. The limit for the rest of the state rose about 2% to $275,650.

These limits apply to FHA case numbers assigned on or after Jan 1st. The case number typically is assigned at the beginning of the mortgage process, so if you need these higher limits, you’ll need to be patient.

The maximum conforming loan limit is going up in 2017. This is the max loan size for a Fannie Mae or Freddie Mac mortgage, what we sometimes call a conventional loan. The new limit will be $424,100, up from $417k.

This is the first increase since before the financial crisis. The Housing and Economic Recovery Act of 2008 established $417k as a baseline and directed the Federal Housing Finance Agency to adjust the limit each year to account for changes in the national average home price. However, the Act required that the limit not rise until home prices had recovered to their pre-crisis level.

The FHFA set third quarter of 2007 as the official pre-crisis price level, and the price level in the third quarter of this year exceeded it by 1.7%. The increase in the loan limit matches that increase.